Here is Personal Finance Planning steps that would help you in managing your finances. These Personal Finance Planning Steps are from the Personal Finance Guru Ashal himself.
How many of you do agree that your personal finance life is cluttered, complex, aimless?
Answer in only one word.Either Yes or No.
Thanks to everyone who answered.
Congratulations to all who answered ‘NO’. You people are having control of your financial life. Congratulations to all, who answered ‘YES’. Thanks for accepting that you need to take actions to control your financial life.
Action plan. Here it goes. It’s not only for YES, even NO can fine tune their lives. Now here are steps to get control of your finances.
- Make a list of all your investment and assets and liabilities. Once it’s done, reply in your own YES.
- Step 1 was about knowing, where do you stand today in terms of your assets , investments and liabilities. Are you having a positive net worth or a negative net worth?
Here goes, Step 2.
If not listed already, list down all your bank accounts and decide to cut down your total no. of Bank accounts. Once identified, mark the activity as 2. Done.
- Here comes the step no. 3. Identify your emergency corpus is in place or you are working on it with a plan. Say having 6-9-12 months’ expenses equal money to be kept as Emergency corpus. Mark your step as 3.
- Here comes step no. 4. Write down all your future goals. Put them in different time frames say, 0-2Y, 3-5Y, 5-10Y, 10Y and beyond. Put value for each goal, assuming if this goal is yo be done in 2017. Compare the combined number of all goals with your net worth, calculated in step 1.
Now inflate your numbers for actual consumption years like 2020, 22, 25, 30 & so on.
Mark this activity as step 4.
- From the comparison of your net worth and current cost as well as future cost of goals, you are aware now that there is a shortfall of money. This short fall is to be filled by your Term Plan. Identify your term plan need and purchase adequate term plan, if not done already. Marked your step as 5.
- Here comes the next step. Step no. 6. Please identify your health insurance need and make sure your personal policy(ies) covering you, your family and parents is(are) in place. If not purchased already, sort out your insurer today and purchase. Mark it as 6.
- Here comes Step no. 7. Go back to your goals counted in step 3, calculate, how much do you need to invest on monthly basis for each individual goal, at different rates. Say 4% rate for a 0-2Y goal. 5-6% rate for 3-5Y goal. 6-8% rate for 5-10Y goals and 8-10% rate for 10+Y goals. Mark your step as 7.
- Now moving to Step 8. Based upon your goals, decide your asset allocation between Debt, Eq and cash. Select investment instruments accordingly. Mark your step as 8.
- Here is the step no. 9. Write down your Will. Mark it as 9. Done.
So here is list of steps you can take to plan your personal finances.